As tourism takes a plunge, Corinthia Group looks up
David Darmanin
Faced by the new, challenging realities of the international economic climate, Corinthia Group’s International Hotel Investments plc (IHI), is making an attempt in turning the situation to its favour by “stepping up” its business development activities “in pursuit of new hotel acquisition opportunities” at favourable prices.
Listed on the Malta Stock Exchange, IHI is a hotel investor and developer, with substantial cash resources and low debt to equity ratios. IHI is also fortunate to have the support of strong institutional shareholders such as LFICO of Libya and Nakheel Hotels of Dubai.
Asked for his comments, an IHI spokesperson told Business Today: “The current financial turmoil is resulting in countless opportunities in major cities worldwide to acquire real estate at keen valuations. IHI is closely following developments in a number of target cities including New York, Madrid, Paris and Moscow, and is actively discussing potential projects in all of these destinations.”
But IHI is also an owner of operating hotels.
“The current economic climate is having a downturn effect on occupancy levels in some – but not all – of the cities where IHI is invested,” the spokesperson said. “The geographic spread of IHI’s hotels mitigates against downturns in certain destinations.”
So while they have made plans to further invest in new trophy acquisitions, IHI is “at the same time taking steps to increase our marketing and re-assess our cost-base in those hotels where we expect to have a downturn in demand.”
Asked to indicate what type of property is mostly sought after by the group, the spokesperson explained: “In the recent past, it was not uncommon for investors and developers to acquire property for development on the basis of highly leveraged financing, that is to say, they would have bought properties principally with borrowed money. It is also not uncommon for investors to have acquired such loans on the basis of having only to repay interest on an annual basis, with the entire capital or most of the capital being repaid at the end of the loan term. Investors whose loans are now nearing maturity are finding difficulty in refinancing such borrowings, and are being forced into the sale of their property assets. This is one scenario. Other scenarios reflect the situation that investors are tight overall and need to off-load property to balance their books. Fortunately, IHI has a strong balance sheet and conservative debt levels. This puts us in a unique situation in the current climate.”
